Posts tagged with "form 990"

Form 990 Filing Period Extended 60 Days

Tax-exempt organizations will have an extra two months to file their federal Form 990 because of the novel coronavirus (COVID-19). The Internal Revenue Service (IRS) extended the April 15 deadline for individual taxpayers and now has done the same for nonprofits.

Organizations are required to file the Form 990 no later than 4½ months after the end of their fiscal year. For nonprofits that operate on a fiscal year ending Dec. 31, that would normally mean filing their Form 990 by May 15. Some organizations file extensions until Aug. 15, or sometimes even Nov. 15 at the latest. Now, charities will have until July 15 to file their 990 without having to file any extension.

“The IRS had left charitable nonprofits out of the solution when it extended the Tax Day for every other entity until July 15. But the new extension of the nonprofit tax filing deadlines until July 15 is the correct move, since charitable organizations throughout the country are focused on the things that truly matter right now; providing urgent medical care, caring for the children of first responders, feeding, housing, protecting so many vulnerable people at greatest risk of exposure to COVID-19,” Tim Delaney, National Council of Nonprofits president and CEO, said in a statement. 

“This is not a time to complain: ‘What took IRS so long.’ It’s time to acknowledge that reason prevailed and that nonprofits need to be 100 percent focused on addressing critical needs rather than tending to paperwork,” he said.

Almost 97 percent of nonprofit respondents in a recent survey indicated they have been negatively impacted by COVID-19.

On March 13, President Donald Trump issued Notice 2020-18, an Emergency Declaration that instructed the Secretary of the Treasury “to provide relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency. In an update to that notice, “Additional Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic,” Notice 2020-23 specifically notes extensions for Form 990-PF and others. The annual Form 990 isn’t mentioned explicitly in the notice but the annual filing deadline is delayed by operation of that notice and a pre-pandemic decision, according to the National Council.

What’s your nonprofit tax IQ?

What should your organization know about Nonprofit Taxes?  Aren’t nonprofit organizations exempt from nonprofit tax issues except employment related taxes?   The answer is no, but many organization’s make this assumption.  With limited accounting and finance staff, there is a tendency to rely too much on other professionals for this knowledge.   It is also important to develop internal capacity to deal with nonprofit tax issues as the board and management are ultimately responsible.  If these nonprofit tax issues aren’t dealt with proactively, they can take significant effort and resources to resolve later, reducing your ability to serve others.   Keep in mind that just because an organization has received tax-exempt status from the federal government does not mean it is exempt from state and local taxes, property taxes, sales taxes, payroll taxes, or other taxes.

The following is some basic nonprofit tax knowledge:

  • Form 990 – The Internal Revenue Service Form 990.
  • Independent Contractors – Make sure they are issued an IRS Form 1099-MISC at year end. More information on the Form 1099’s can be found on the IRS website:  IRS.GOV     You must issue Form 1099-MISC to each person who you have paid at least $600 for services and rents and Corporations are generally exempt from this requirement which is why you need to obtain a W9 from each vendor before you pay them.
  • Health Care Tax Credit – There has been a health care tax credit available for smaller nonprofits with 25 or fewer employees starting in 2010.
  • Property and Utility Taxes – If your organization owns a building, are you sure you are exempt from property and utility taxes?
  • Sales and Innkeeper Taxes – If your organization purchases items, are you sure you are exempt from sales and innkeeper taxes.
  • Federal Payroll Taxes – Nonprofits must comply with both federal and state payroll reporting requirements. Federal Tax Withholding, Social Security Taxes, and Medicare Taxes must be deposited through the Electronic Federal Tax Payment System (EFTPS).  The frequency with which deposits must be made depends on the size of the payroll, and may be semi-weekly, weekly, semi-monthly or monthly.  In addition, the organization must file a Form 941 on a quarterly basis.  Keep in mind that Board members should be especially aware of potential personal liability for payroll taxes.  Federal law requires someone is the “responsible party” and is personally liable for payroll taxes which could be the board member.
  • Unemployment Taxes – In Indiana, a nonprofit employer of 3 employees are less should be exempt from State Unemployment and most are exempt from Federal Unemployment.  Nonprofit Organizations that have four or more individuals employed in the current or preceding calendar year are required to provide State Unemployment to its employees.
  • Other – For Charitable Gaming, do you follow these laws and have systems to be in compliance. For fundraising events, what steps are you taking to minimize facility fees?  For merchandise or publication sales, what are you doing to minimize any fees or taxes?  Did we file our annual report with the secretary of state office?  Are we providing written acknowledgement for gifts over $250 and provide the fair value of any goods or services in exchange for a $75 or larger donation?

More Information – At the end of the article will go into more detail about how to stay in compliance and avoid taxes and penalties.  What are you doing to make sure you are paying no penalties and taxes and staying in compliance.   If this nonprofit tax issues aren’t dealt with proactively, they can take significant effort to resolve with significant resources allocated to compliance.  Additionally, these taxes and penalties increase your cost and ability to serve others.

The Internal Revenue Service Form 990-Keep in mind the different filing thresholds which include Form 990-N Electronic Notice (e-Postcard) for organizations with gross receipts of $50,000 or less.  Form 990-EZ threshold is gross receipts of $200,000 or less and Total Assets at the end of the tax year less than $500,000.  Organizations with $200,000 or more in revenue or $500,000 of assets will file the full Form 990.  Form 8868 (extension) may be filed electronically or in paper form.  The IRS Annual Report noted the following common issues:  private benefit and inurement, no filers, political activities, employment tax issues, and organization’s not operating as required by exempt status.

The health care tax credit is a great contribution to smaller nonprofit to offset increasing health insurance costs.  It maybe difficult to qualify if the employer contributions to health insurance are not enough or the average salary of your employees exceeds $50,000.

For property, utility, innkeeper, and sales tax exemptions, you need to make sure that you meet the proper filing requirements.     A nonprofit organization must register for a sales tax exemption by filing Form NP-20A, available online at http://www.in.gov/dor/3506.htm  Form ST-105 is used by nonprofits for sales tax exemptions including the 10 digit state tax ID.   The Sales Tax Information Bulletin #10 lists out the nonprofit sales tax exemption.  Form ST-200 is used for each account to exempt sales taxes from utilities.  GA-110L can be filed to claim a sales tax refund relating to utilities for the current and prior 3 years.  For property exemptions, you need to file Form 136 on the even years along with Form 103 and Form 104

For IN state unemployment, you are no longer exempt once you employ four or more individuals for a day for 20 weeks during the calendar year. There is no minimum dollar amount associated with this qualification.  You may opt to become a reimbursable employer, as opposed to an employer paying premiums.

Our firm provides tax preparation and consulting services so please contact us if we can help your organization.